1929 (10) TMI 9 - HC - Income Tax

Postcard not valid notice under Income Tax Act; Assessment upheld without registered post requirement

The court held that the postcard communicating the adjournment is not considered a notice under Section 23(2) of the Income Tax Act. It was determined ... - Issues Involved:1. Whether the postcard communicating the grant of adjournment is a notice under Section 23(2) of the Income Tax Act.2. Whether the postcard should have been served by registered post.3. Whether the postcard, if not sent by registered post, invalidates the assessment under Section 23(4).Issue-wise Detailed Analysis:1. Whether the postcard communicating the grant of adjournment is a notice under Section 23(2) of the Income Tax Act:The court examined whether the postcard sent by the Income Tax Officer (ITO) to the assessee, informing him of the adjourned date, constitutes a notice under Section 23(2). The original notice under Sections 23(2) and 22(4) required the assessee to produce his accounts on 4th October. The assessee requested an adjournment via telegram, which was partially granted, and the new date was communicated via postcard. The court reasoned that the power of adjournment is inherently vested in the ITO, as indicated by the phrase 'or as soon afterwards as may be' in Section 23(3). This implies that the ITO can adjourn the hearing without issuing a new notice under Section 23(2). Consequently, the postcard is not considered a notice under Section 23(2).2. Whether the postcard should have been served by registered post:The court analyzed whether the postcard should have been sent by registered post as per Section 63 of the Act. Section 63(1) states that a notice or requisition under the Act must be served either by post or as if it were a summons issued by a court. The court concluded that there is no statutory obligation for the ITO to issue a reply to an adjournment request via registered post. The postcard was deemed an act of consideration rather than a statutory requirement. Therefore, the postcard did not need to be sent by registered post.3. Whether the postcard, if not sent by registered post, invalidates the assessment under Section 23(4):The court addressed whether the failure to send the postcard by registered post invalidates the assessment made under Section 23(4). The assessee argued that the lack of registered post service invalidated the notice, thus invalidating the assessment. However, the court held that since the ITO has the power to adjourn the hearing without issuing a new notice under Section 23(2), the postcard does not constitute a notice or requisition under the Act. Therefore, the assessment under Section 23(4) remains valid despite the postcard not being sent by registered post.Conclusion:The court answered both branches of the question in the negative. The postcard communicating the adjournment is neither a notice under Section 23(2) nor a requisition within the meaning of Section 63 of the Act. Consequently, the assessment under Section 23(4) is valid even though the postcard was not sent by registered post. The petitioner was ordered to pay the Commissioner's costs, including an advocate's fee of Rs. 250.